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DOJ Wants to Slam Apple With Antitrust Limits After Trial Verdict

NEWS ANALYSIS: A proposal submitted by DOJ would force Apple to end publisher agreements, put new limits on book, music and video sales and appoint a court monitor.

The U.S. Department of Justice is proposing to come down hard on Apple after the company was found guilty of price fixing charges in July after a trial in U.S. District Court for the Southern District of New York.

U.S. Judge Denise Cote found that Apple had conspired with five book publishers to fix prices higher than those being charged by Amazon at the time while also forcing Amazon and other online book sellers to charge similar prices. The DOJ presented an overwhelming pile of evidence, including emails from then-CEO Steve Jobs setting up the conspiracy.

The Justice Department laid out its proposals for punishing Apple in a press release issued on Aug. 2. In that document, the government said that it was proposing that Apple be forced to terminate the agreements it had with the five major book publishers involved in the conspiracy and to cease making any other attempts to fix prices. The proposal would also prevent Apple from entering into any contracts that would prevent price competition for five years and it would prevent any retaliation against publishers that refused to sell books on Apple’s terms.

But there are other provisions that could prove particularly galling to Apple. The company must allow links to other book sources, including Amazon’s Kindle software and store. “To reset competition to the conditions that existed before the conspiracy,” the DOJ explained, “Apple must also for two years allow other ebook retailers like Amazon and Barnes & Noble to provide links from their ebook apps to their ebookstores, allowing consumers who purchase and read ebooks on their iPads and iPhones easily to compare Apple’s prices with those of its competitors.”

Further reading

In addition to focusing on ebooks, the government is also proposing to keep an eye on Apple’s dealings in regards to other media. “Apple will also be prohibited from entering into agreements with suppliers of ebooks, music, movies, television shows or other content that are likely to increase the prices at which Apple’s competitor retailers may sell that content.” In other words, Apple’s sale of music and video through iTunes and the Apple music store is also restricted.

But just in case Apple doesn’t get the message, the DOJ is proposing that a court-appointed monitor be put into place within Apple “to ensure that Apple’s internal antitrust compliance policies are sufficient to catch anti-competitive activities before they result in harm to consumers.”